 If the cryptocurrency, like Bitcoin, were to become a commonly accepted medium of exchange, a global decentralized monetary system that no third party can stop or control, would the US government attempt to make it illegal and to prosecute the developers who contribute to its code base? Is software protected by the First Amendment? Will the government one day prosecute individuals who design 3D printed guns and then make their plans downloadable on the internet? Last week brought cause for alarm that a federal crackdown on the decentralized open source software movement might be coming. In the past, the US government has pursued financial service companies like cryptocurrency exchanges, holding them criminally liable for mishandling other people's money, or first facilitating international payments without following Know Your Customer and other regulations. But what happened on August 8th was different. The US Treasury Department announced that it was adding tornado cash, a tool for making cryptocurrency transactions anonymous to the US sanctions list. Dutch authorities arrested a suspected developer of tornado cash, accusing him of facilitating laundering of billions of dollars of stolen funds. What's he guilty of? Writing code and making it free on the internet. What triggered the US crackdowns on tornado cash was the allegation that the hacking collective The Lazarus Group used tornado cash in an attempt to disguise cryptocurrency payments worth about $455 million to North Korea's missile program. The Treasury Department's action is reminiscent of the case against the software developer Phil Zimmerman, who developed and distributed software known as PGP in the early 1990s, which was the first widely accessible tool for sending messages over the internet with powerful encryption. I'm delighted to hear good stories about how it's used in places where there are oppressive governments. Zimmerman became the target of a three-year federal investigation on the grounds that his software was so powerful that making it possible for foreigners to download it online was the equivalent of distributing weapons to foreign countries without permission from the State Department. The government ultimately dropped the investigation thanks in part to free speech activists who printed the entire PGP source code and a book published by MIT Press and sold it abroad to make the point that its creation was a form of writing protected by the First Amendment, just like any other book. Zimmerman's legal battle was part of what's known as the Crypto Wars, which refers to the ongoing battle to keep powerful cryptography legal. We just want to make sure we have a trapdoor and a key under some judge's authority where we can get there if somebody's planning a crime. Sanctioning of tornado cash is the latest chapter in that struggle. To better understand its implications, I reached out to attorney Jerry Breida, who's the executive director of Coin Center, a nonprofit focused on policy issues and regulations facing Bitcoin and other cryptocurrencies. Briefly, what is tornado cash and what action did the U.S. Treasury just take against it? That's such an easy question. What's been sanctioned here is not a person. There's a sanction on a tool and so the sanction really is on millions of Americans who otherwise might want to use that tool for completely lawful purposes. As a result of this sanctioning, the developers of the tool have had their account suspended at GitHub where they publish code. That in itself is not a violation of the First Amendment because that's a private company basically saying we don't want you to be publishing on our platform, but it is in Disha of a chilling effect on free speech. So basically anybody who is in any way associated with this tool, which again is a neutral tool that can be used for good or for ill, these people are now being basically deplatformed in such a way that they don't have an ability to speak and may in the future not choose to speak because of the repercussions of these sanctions. Tornado cash is what's known as a coin mixer, meaning it blends together multiple cryptocurrency transactions and then breaks them out again with the purpose of making it harder for sleuths to follow the payment trail. It's a technique for protecting financial privacy and has been used to avoid detection by authoritarian governments. Last month I put out a video in which I asked Alex Gladstein of the Human Rights Foundation if he was worried that the government was on the verge of banning coin mixers outright. That's something you're worried about that the very act of anonymizing your Bitcoin will be deemed by governments to be money laundering. What is legally protected as open source software and free speech is coin joints because they are merely their open source code, there's no one taking control of your Bitcoin. It's a collaborative spend. That's completely legal here. And I think if someone tried to make it illegal there would be very, very strong pushback on all kinds of First Amendment and Third Amendment, etc., like all kinds of different grounds. So I think that collaborative spending is going to be defended in the United States. It's certainly not in a dictatorship, but here, yes. One reason that Americans might want to use this tool is to make anonymous political speech contributions. In the 1990s, the intelligence community sought congressional authority to outlaw end-to-end encryption on the grounds that terrorists could use it to communicate without the NSA listening in. Similarly, when adding Tornado Cash to the sanctions list, the Treasury Department asserted that all virtual currency mixers could use Tornado Cash to donate funds to Ukraine. Similarly, when adding Tornado Cash to the sanctions list, the Treasury Department asserted that all virtual currency mixers that assist criminals are a threat to national security. Treasury will continue to investigate the use of mixers for illicit purposes. People who look at the broad strokes here might say, you know what, North Korea is using this to launder hundreds of millions of dollars of stolen money to build weapons that threaten us. Something has to be done. What do you say to that? Yeah, you know, I'm very sympathetic to the folks in the national security community who are seeing this thing, that is a tool that's being used by North Koreans to launder funds that potentially could then be used to build weapons of mass destruction, etc. And they want to do something about this. And unfortunately, where we are is that the only thing that seems to be available to them would be to make it so that nobody can use it, right? Because it really is, because it's a decentralized, unowned application that anybody can use, there's really no good way to be able to allow law-abiding citizens to use it and disallow bad actors from using it. Basically, it's a tool like email, like the Internet, that is available for anybody to use. And so then really it comes down to a question of equities, right? What do you think is more important? Is it a risk of bad guys using it? Or is it more important to you that law-abiding citizens have First and Fourth Amendment rights and privacy and free speech rights and the ability to protect them? Britain says the Treasury Department's action is a threat to the entire cryptocurrency space because it also made it illegal for any U.S. citizen to hold cryptocurrency that previously ran through the tornado cash mixer. That's like making it against the law to possess a $100 bill that at some point passed through the hands of someone who did something illegal, even if you have no knowledge of its provenance. One researcher found that almost half the addresses in the Ethereum network are two degrees of separation away from a tornado cash transaction. In other words, they received a payment from an address that has received a payment that ran through the mixer. What if somebody sends you money through tornado cash that you never solicited or know nothing about? This is the way blockchains work. And so we've seen that this week somebody has been doing that, has been sending small amounts of cryptocurrency using tornado cash to prominent celebrity addresses. So Jimmy Fallon, for example, was sent crypto through tornado cash after the sanctions. And so now technically he is in violation of sanctions law. What do people like that do? And then imagine that you are somebody who receives through just normal law-abiding transaction with somebody who you know is a law-abiding person. You receive funds, but then you notice that the funds that you received, maybe four or five persons back, went through tornado cash. What is your obligation there, if any? I would think there would be none, but OFAC has not been clear about what that would be. They've said nothing. It's clear it's not the right word. They've been silent. If this president stands, there's no reason why OFAC couldn't say that Signal, the chat app that's encrypted, is used by North Koreans to facilitate bad activity and that it is therefore banned. Signal is a firm, and so you could put it on a sanctions list. Now I kind of take that back maybe just a little bit because Signal happens to be an American company and you can't sanction Americans. You would have to go through some due process, right? But you can imagine that this could happen to some open source code, right? So there is open source code that if you run it, you can have a Signal-like decentralized encrypted chat. Well, potentially that could be added to the list, and so it's not just cryptocurrency, right? It's anything that is just code. Where do you see this fight going? I think what's happening here is that regulators and law enforcement have always relied on intermediaries to be able to catch bad guys, right? So they can always go to intermediary choke points, whether it's in communications or in financial transactions, and they can go to those intermediaries and using legal process and regulation. They can effectuate their ends. And with crypto technology, what they're finding is a lot of the things that you needed to use an intermediary for, you no longer do. These things are being disintermediated. And so when they go to try to serve legal process on an intermediary, they find that, wait, there's no intermediary here, right? There's a mixing service, but the mixing service isn't a service. It's not a company. And so I think this is where they're taking actions that are unprecedented and probably, maybe they don't realize it, but probably are straying into violations of constitutional rights. And so that's just something we're going to have to go through. At the end of the day, I'm optimistic because our constitution has served us well for 250 years. I think it will continue to do so, and I think we will find the right balance. Unfortunately, I think it's going to have to go through the courts. Tornado cash is a tool, and tools are neutral, just like Bitcoin, encryption, guns, even telephones. Terrorists and dictators can use them as can human rights activists and dissidents. The government should target the criminals and authoritarians who threaten human freedom, not the programmers and cryptographers who build new technologies that can better secure human freedom.